For decades, technology has been both the boon and bane of the music industry. Advances in recording mediums, from 8-track to cassette to CD, have kept listeners engaged and buying. But the MP3 and ongoing online evolution have posed challenges to the industry, and at this past June’s 36|86 conference Nashville Music Row vets Joe Galante, Heather McBee and Randy Goodman ran through the challenges that have faced, and will continue to face, the recording world.
Galante, a former chair of Sony Music and now mentor in residence at the Nashville Entrepreneur Center, took a look back at how earlier tech advances meant both increased mobility for the consumer, but also added revenue for record labels. That carried through to the early days of digital, because people still needed CDs to play music in their cars. Now, however, the payout for labels is much smaller in a landscape dominated by MP3s.
With disruption comes opportunity, noted McBee, a former Sony Music and Cumulus Media executive and now director for the Project Music Accelerator at the Entrepreneur Center.
“One thing that digital and advancing tech have done is create the opportunity to go and mine the catalog without a heavy cost and the risk of carrying physical inventory,” she pointed out. “They have created a new, unique way to manipulate content in a creative way to generate more revenue.”
That point was rebutted somewhat by Goodman, the current chair of Sony Music, who points out that the current new technology and distribution configurations mark the first time that revenues aren’t rising. In fact, he says, they are declining, thanks to the “democratization” of accessing music.
The trick now, the three say, is to figure out how the recording industry can continue to monetize its assets, and to continue investing in and developing new artists. For one, Goodman said, the industry won’t continue to attempt to litigate itself out of a hole, but rather will continue the partnerships it has developed with Apple Music, Spotify and other distribution hubs. This will open the door for entrepreneurs and others to play for both sides.
What will that look like? Goodman pointed out that labels have always been the venture capitalists in the recording economy, spending the time and money to grow new artists, and then reaping the rewards of that investment as the artist succeeded. Now artists are doing their own brand development and often are fairly well known before making a major-label deal. They get a lot of help building that base from entrepreneurs, McBee said.
“The industry is looking outside itself for help on how to manage the new tech,” she said. “The labels know what the issues are, but they don’t have time to sit down, dive in and solve them. We’re two years into the Project Music Accelerator, and we have entrepreneurs who are willing to work their asses off to fill that gap and help the industry solve its pain points.” The third Project Music cohort begins in January 2017 and they have recently announced extended support from the Country Music Association (CMA) through 2018.
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